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S&P Short Term ATH?The sell off that started in December 2021 and January 2022 was thought of the "crash" that most logical analyst and economist are waiting for. It was illogical for markets not only recover the March 2020 sell off but set a new ATH during a year which saw the largest unemployment event also a pandemic and recession. The rally we know was Fed induced stimulus through QE corporate bond buying. The day the Fed announced tapering, rate hikes, and shrinking balance sheet is when the markets started selling. It wasn't ANY other reason except this. A market fueled by Easy Money will not continue to rally if the very things that fueled it are taken away. The rallies we have been witnessing are fueled by Corporate Buy Backs. In fact, according to Bank of America data, Retail Investors and Institutional Investors are still net sellers. This rally will be short lived. The economic data is still worse than expected and getting worse. BUT .. it seems that we will see a new ATH for the S&P500 before the actual crash happens. The Nasdaq should not make a new ATH, but the Dow has a great possibility it will. We could see a Double-Top followed by the crash or a new ATH. A conservative 35% fall would put the S&P in the low 3,000s.
AMEX:SPYLong
by WorldEconomics
5
Here's Why the Stock Market is at Risk of Further DeclineThe chart above shows the S&P 500 (SPX) relative to the price of the 10-year U.S. Treasury bond (1/US10Y). As you can see, when adjusted in this way, the S&P 500's decline in 2022 is no longer apparent. This could be a warning that further stock market decline is to come. Let's walk through why this may be. First, it is important to understand that an interest rate is simply the cost of money. Central banks use interest rates to raise or lower the cost of money, which can impact the money supply by lowering or raising it. For details on how the interest rate can impact the supply of money, you can check out my post here: When we look at a chart of the yields on the 10-year U.S. Treasury bond, as shown below, what we're actually looking at is a chart of the cost of money. When the Fed says it will continue to hike rates and hold them higher for longer, what the Fed is really saying is that it will continue to raise the cost of money and keep money costlier for longer. This is bad news for the stock market because it is unlikely to undergo a massive bull run while money remains scarce. In fact, Fed Chair Powell recently stated that a high stock market valuation is a cause of the labor shortage. High stock market returns incentivize people to retire early and live off of investment income. Combined with the already difficult demographic headwind of an aging population, the economy becomes faced with too many people consuming and too few people producing. This is a major cause of the labor shortage. Thus, if high stock market returns are a cause for the labor shortage, and the Fed's goal is to mitigate the labor shortage to mitigate inflation, then the stock market is likely to face prolonged headwinds. A massive bull run in the yields on bonds has come along with a rapidly declining supply of money. Until this trend ends, there is simply not enough money to propel the stock market to new all-time highs. Remember that the stock market is largely a measure of corporate earnings, and corporations can only ever earn some subset of the total money supply. What might a record decline in the money supply say about the future of corporate earnings? Government bonds, especially U.S. Treasury bonds, are considered risk-free assets since the central government, which issues these bonds, has the ability to print more money and thus can always afford to avoid default. In a normal market, whenever higher interest rates are demanded by market participants for an asset the market is saying that it perceives greater risks associated with that asset. The higher interest rates compensate investors for the greater risk. Since the rates on U.S. Treasurys have soared, the market is sending the message that it now perceives these assets as riskier. Although Treasurys can be perceived as risk-free from a default perspective, there is still a risk of loss, especially when higher inflation becomes entrenched for the long term. The increased risk can actually become a positive feedback loop because as the market demands higher rates due to inflation, then the government will have to pay more to service its debt. Such an expansion in the cost of debt service can cause the market to then believe the bond risk is higher, and the market may demand yet even higher interest rates. (Although the central government can always print more money to pay its increased debt, for political reasons it may choose default instead. Thus, there is a risk of default even for theoretically risk-free bonds). Furthermore, even if the central government chooses not to default, it will be forced to print more money to service higher debt which could worsen inflation and, in turn, keep rates higher for longer. Therefore, it is important to understand that in the face of high inflation, risk-free Treasurys have become risky relative to their historical norm. In that regard, since all other assets except physical gold (e.g. stocks, corporate bonds, cryptocurrency) are inherently more risky than Treasurys, all other assets become less stable. This concept is illustrated in Exter's Pyramid, shown below. When an asset class lower down in the inverted pyramid becomes unstable, everything above it will experience some greater degree of instability. The most speculative fringes of the market (the top of the inverted pyramid) are likely to experience outright liquidity crises. We are already beginning to see this in the cryptocurrency space which is not pictured on the pyramid, but which if it were, would be near the top. So a massive bull run of the S&P 500 relative to the price of 10-year US Treasurys is not a good sign. What this chart is showing is that the S&P 500 is becoming more and more overvalued relative to risk-free Treasurys, even as the S&P 500 nonetheless sells off! The amount of capital that is currently invested in the S&P 500 is too high for the yields on 10-year Treasurys to be as high as they are. This suggests that capital will tend to flow out of the stock market and into less risky and higher-yielding Treasury bonds. The Federal Reserve is trapped by commodity inflation because it cannot cut interest rates, or make money cheaper, without worsening commodity inflation. If scarcities of commodities continue to weigh on commodity prices, keeping them elevated even as demand cools, then the coming stagflation is likely to be severe. Since the yields on the risk-free Treasurys have skyrocketed, this means that even after all the declines we've seen so far, most assets are still overvalued. Look how high the value of Nasdaq 100 stocks has risen relative to the risk-free 10-year Treasury. The last time this happened was right before the Dotcom Bust in 2000. Although this relative chart does not predict whether the price of Nasdaq 100 stocks will go down, or the yields of 10-year Treasurys will go down, it does suggest that if the yields of 10-year Treasurys remain elevated, as the Fed suggests will happen, then the price of Nasdaq 100 stocks is likely to fall even further. In the chart below, we can see that the fastest and most extreme yield curve inversion in history is occurring right now. This could suggest that the onset of the impending recession could be as equally fast and as extreme. The abruptness of FTX's collapse due to liquidity issues could be a harbinger of what's to come. The Federal Reserve is already adding liquidity back into the banking system. Job openings likely reached their cycle high and will continue to decline into the foreseeable future as the supply of money remains some degree tighter into perpetuity. In the U.S., population and GDP grew at an exponential rate over much of the past century. This, in large part, allowed for the money supply to also grow at an exponential rate without high inflation. Since the stock market tracks the money supply, the stock market also largely grew exponentially as well. However, as population and GDP growth slow, this creates the risk that an exponentially growing money supply may result in persistently high inflation. In the coming recession, which will likely be characterized by severe stagflation, central banks will likely have to convince the market that high inflation is good.
SP:SPX
by SpyMasterTrades
55
Bullish above last month HIGH Buy signal still valid SPX SPY SNPWith all the Doom & Gloom regarding recession worries we liked our idea even more so into Q1 close last month. So far so good however we are still very early in Q2. We remain bullish above last months high (March 2023) Seeking Pips will be managing our positions on the Weekly and Daily charts. We also note that the current price is also in a key Fib retracement zone to SELL SPX on the monthly chart so we will not be surprised to see another pullback, again we would consider adding to our core position if this happens and volatility is right. Our Bull & Bear price level is clear and as long as we above it we want to be buyers only. A failure of March 2023 Low we would have to revaluate our current thesis. Happy trading have a GREAT WEEK.! =============================================================== SUBSCRIBE TO OUR CHANNEL & FOLLOW THIS TRADE IDEA FOR UPDATES.
CBOE:SPXLong
by seekingpips
1
Bullish til $407.50 then looking to short the HnS patternThe AD is causing an ascending triangle on the 2hr chart I'm forecasting here, so give me a little rope. The AD is ascending (ascending triangle technically) to $407-$408 area. It's likely to retest the 3rd leg of the Eliott wave which was sold off. This rejection, can cause a bearish Head and shoulders pattern. look at wave 1 as the left shoulder, wave 3 as the head, and this final push in attempt to invalidate wave 3 which will likely cause a bearish head and shoulders pattern. Tomorrows FOMC meeting/discussion is going to be more volatile than normal. Imho, both bulls/bears should be able to eat. I wont take a short position til after $407.50 is touched.. Look at the market heavyweights TSLA, AAPL, SPY (obviously), for clues but will also be looking at $uvxy, $faz, $tlt for additional clues. so seeing this now, I likely wont beat up futures... I'll just be monitoring and posting some updates to the chart. Im both a bull/bear when I need to be..
AMEX:SPYLong
by moneyflow_trader
33
XLF Triple Bottom Support for SPY Bulls, QQQ Daily Bull Flag, - XLF holding triple bottom support 15m, holding above yeseterdays low bounce off of it 3 times today, first initial sign for the bulls. Now bulls need the hourly trend change for XLF back to an uptrend to help SPY - QQQ's drop may seem a lot today due to how fast we pulled back from the morning but we are still way above 0.386 fib retracement on daily therefore QQQ is still in a bull flag zone. - if XLF starts bouncing and changing trends i am likely going to swing some short term bull positions in the leverage 3x SPXL TQQQ TNA
NASDAQ:QQQLong
by ArcadiaTrading
Its More Straight-Forward Than You ThinkThis is an Update to my previous SPY idea - same target/time to target, just more simplified. After the last 2 weeks there is a lot of bearish sentiment but its really just finding support at wave 4 of a leading diagonal. The initial target is 408 in the next week or 2, and then goal target is 425-432 by late March-Early April. The symmetry in the waves indicates this is a leading diagonal (or bearish wolfe wave that is about to complete the final wave). Either way its still bullish near-term. After 425-432 there will be significant downside risk, but for now expect a nice rally through March. We are in the bounce zone, there is still risk to 388-391 early this week, but if any of the following occur we won't see the 388-391: - retest and hold 393 - close above 397.92 - Intraday breach of 401.42 (above 401.42 it will turn into explosive upside)
AMEX:SPYLong
by JerryManders
11
15m 12EMA Perfect Guide For Both Long & Short QQQ & SPYLast week i mentioned the 15m 12 EMA guide for holding onto profits for both SPY and QQQ which we bounced off again this morning. After we broke the 15m 12EMA today i took a day trade on SQQQ and sold it close to the end of the day because we are still in a strong hourly uptrend and I do not want to hold overnight playing countertrend. Notes: - still need to change 4h and daily trend to uptrend, currently in neutral trend - Even thought i shorted today im still leaning bullish on SPX and NASDAQ for longer time frame in 4h / daily and weekly. until price action tells me otherwise so would likely be looking for another TQQQ entry. - Powell speaking this week - we shot straight up 5.5% on QQQ into resistance a pull back for consolidation was very likely
NASDAQ:QQQLong
by ArcadiaTrading
1
$14,600 Profit on TQQQ Swing Trade, What to look for next week. A deep technical analysis as to why I took profit on my 8000 shares of TQQQ and some mistakes I made on my trade that I could of done better. - Also what to look for on Monday, Monday is likely a buying the dip opportunity day for the next move up on SPY and QQQ, i explained what we should be looking for to be buying in again. - the weekly higher low is set and i will be playing off of it - bulls are still in a weekly uptrend and now we have to change 4h and daily trend back to the bulls.
NASDAQ:TQQQLong
by ArcadiaTrading
HOW TO RIDE Your Profits FULLY - 12 EMA BULL TRENDING $QQQ $SPYYesterday I talked about how bears had no follow though at market open and bulls took over after we broke above resistance and that we will very likely get another bull move today higher. - Both SPY & QQQ were trending on the 12 EMA super strong and did not break below it at all - bull 100% comfortable holding their positions throughout the entire day with zero signs of any red flags so far - likely due for a 4h consolidation i'm looking for a 5m or 15m oversold bounce play Monday/Tuesday and ride continue to ride the bull move up until price action tells me otherwise. - took some profit off my TQQQ position at 23.38, still holding some shares will likely add them back on a consolidation for another move up.
NASDAQ:QQQLong
by ArcadiaTrading
3